The continual importations from Peru and Brazil exceed the effectual demand of those countries, and sink the price of those metals there below that in the neighbouring countries.If, on the contrary, in any particular country their quantity fell short of the effectual demand, so as to raise their price above that of the neighbouring countries, the government would have no occasion to take any pains to import them.If it were even to take pains to prevent their importation, it would not be able to effectuate it.Those metals, when the Spartans had got wherewithal to purchase them, broke through all the barriers which the laws of Lycurgus opposed to their entrance into Lacedemon.All the sanguinary laws of the customs are not able to prevent the importation of the teas of the Dutch and Gottenburgh East India Companies, because somewhat cheaper than those of the British company.A pound of tea, however, is about a hundred times the bulk of one of the highest prices, sixteen shillings, that is commonly paid for it in silver, and more than two thousand times the bulk of the same price in gold, and consequently just so many times more difficult to smuggle.
It is partly owing to the easy transportation of gold and silver from the places where they abound to those where they are wanted that the price of those metals does not fluctuate continually like that of the greater part of other commodities, which are hindered by their bulk from shifting their situation when the market happens to be either over or under-stocked with them.The.price of those metals, indeed, is not altogether exempted from variation, but the changes to which it is liable are generally slow, gradual and uniform.In Europe, for example, it is supposed, without much foundation, perhaps, that during the course of the present and preceding century they have been constantly, but gradually, sinking in their value, on account of the continual importations from the Spanish West Indies.But to make any sudden change in the price of gold and silver, so as to raise or lower at once, sensibly and remarkably, the money price of all other commodities, requires such a revolution in commerce as that occasioned by the discovery of America.
If, notwithstanding all this, gold and silver should at any time fall short in a country which has wherewithal to purchase them, there are more expedients for supplying their place than that of almost any other commodity.If the materials of manufacture are wanted, industry must stop.If provisions are wanted, the people must starve.But if money is wanted, barter will supply its place, though with a good deal of inconveniency.
Buying and selling upon credit, and the different dealers compensating their credits with one another, once a month or once a year, will supply it with less inconveniency.A well-regulated paper money will supply it, not only without any inconveniency, but, in some cases, with some advantages.Upon every account, therefore, the attention of government never was so unnecessarily employed as when directed to watch over the preservation or increase of the quantity of money in any country.
No complaint, however, is more common than that of a scarcity of money.Money, like wine, must always be scarce with those who have neither wherewithal to buy it nor credit to borrow it.Those who have either will seldom be in want either of the money or of the wine which they have occasion for.This complaint, however, of the scarcity of money is not always confined to improvident spendthrifts.It is sometimes general through a whole mercantile town and the country in its neighbourhood.Overtrading is the common cause of it.Sober men, whose projects have been disproportioned to their capitals, are as likely to have neither wherewithal to buy money nor credit to borrow it, as prodigals whose expense has been disproportioned to their revenue.Before their projects can be brought to bear, their stock is gone, and their credit with it.They run about everywhere to borrow money, and everybody tells them that they have none to lend.Even such general complaints of the scarcity of money do not always prove that the usual number of gold and silver pieces are not circulating in the country, but that many people want those pieces who have nothing to give for them.When the profits of trade happen to be greater than ordinary, overtrading becomes a general error both among great and small dealers.They do not always send more money abroad than usual, but they buy upon credit, both at home and abroad, an unusual quantity of goods, which they send to some distant market in hopes that the returns will come in before the demand for payment.The demand comes before the returns, and they have nothing at hand with which they can either purchase money, or give solid security for borrowing.It is not any scarcity of gold and silver, but the difficulty which such people find in borrowing, and which their creditors find in getting payment, that occasions the general complaint of the scarcity of money.
It would be too ridiculous to go about seriously to prove that wealth does not consist in money, or in gold and silver; but in what money purchases, and is valuable only for purchasing.
Money, no doubt, makes always a part of the national capital; but it has already been shown that it generally makes but a small part, and always the most unprofitable part of it.
It is not because wealth consists more essentially in money than in goods that the merchant find it generally more easy to buy goods with money than to buy money with goods; but because money is the known and established instrument of commerce, for which everything is readily given in exchange, but which is not always with equal readiness to be got in exchange for everything.